People run to a financial institution to avail themselves of money to solve their problems. Like everything else, the personal loan also has a mechanism. There are certain things that you have to know when wanting a personal loan, especially in Singapore. It is about the maximum amount available that is subjected to the terms and conditions on the interest and repayment of the personal loan. In this article, we will see the things to know about Personal loan.
Banks and Non-Banking Financial Companies offer personal loans as unsecured loans to the people to satisfy their personal needs. They refer to many parameters like personal income, credit history, employment history, the capacity of repayment, and many more. Remember, personal loans Singapore are unsecured and so the borrower doesn’t need to submit any collateral. Subsequently, the banks cannot leave the property in an auction in case of default.
Personal loans demand a high-interest rate when compared to the car and gold loan. When a borrower cannot repay the personal loan, it directly reflects in the credit report and stays as a blackmark hindering all the financial activity of the borrower in the future. It is common for every one of us to face an uncertain situation where we will need money. It’s important to do your research when committing to a loan because each bank will offer diverse features and terms.
Purpose
There are countless reasons for consumers to seek personal loans. Usually, consumers will go for a personal loan Singapore for purchasing or any other expenses are way too much to load over a credit card. Consumers will seek a loan for the unexpected expenses they face. It would include home renovation, purchasing new equipment, and most importantly medical expenses.
The reasons also include major events like weddings, etc. Personal loans are also sought after to pay off the credit card or debit card debts. Students also gain a lot of benefits as students can get very fewer interest rates. However, personal loans do not carry the same benefits as that of the exclusive student loan. It is highly recommended to have a word with a tax professional.
Applications
It is always preferable to get personal loans from the bank to which you already have correspondence. Doing this will help the bank to help you by showing loans that are more suitable to your needs. However, when it comes to getting loans, always make sure that you choose after putting in a lot of thoughts and decide to borrow only when you can pay it back promptly. Sit back and calculate the payments so that you can check and fit this expenditure into your budget. It is also important to compare the interest rates in different banks or financial institutions. If you are not in an emergency, give some time for your credit score to set its path in a better way.
No collateral needed
As discussed earlier, being an unsecured loan does not require any collateral. You do not have to worry about your property if you cannot pay back the loan. This is one of the main reasons why personal loans are a little hard to acquire. You should also know that the banks or the financial institution that provides you loans can take other actions like reporting to the credit bureaus, look for a collection agency, or even file a case against you for not paying back promptly.
Fixed amount
Most of the banks have a maximum limit to offer to you as a personal loan in Singapore. Even if you are qualified with a great credit history, you can borrow only up to a particular range. Moreover, you cannot borrow again and again as in the case of revolving credit card balance. The payment you make monthly will reduce the loan amount but will not open more credit. All you can do is to re-apply when you want to borrow more.
Repayment Period
It is simply the period for which you are borrowing the money. Usually, the amount to be paid is smaller when the term is longer and vice-versa. It is highly recommended to choose the shortest repayable term that you can manage. Doing this can save you a lot of money by reducing the interest payments. Generally, the banks of Singapore offer personal loans for a term of 1 year to 7 years with certain terms and conditions.
Interest rates
The interest rates of a personal loan Singapore are fixed for a lifetime. There will be no changes in the interest rates forever in the life of the loan. Some personal loans have variable interest rates. It is better to avoid variable interest rates as unexpected changes in the interest rates can put in a hard situation. Generally, the banks of Singapore charge interest rates based on credit history. If you have a good score your interest rate will be low. There are also penalties for late payments. There are banks that charge origination fees and this would go up to 6 percent of the loan amount. And this again depends on your credit score. Discover more about personal loan with MoneyIQ fast approval loan in Singapore.
